Business model innovation is Chicago's new frontier

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Updated: November 22, 2011 4:10PM

The online business forum has challenged organizations of all sizes to think innovatively about the fundamental business models through which they operate. Businesses of today face a competitive landscape teeming with new and unforeseen entrants equipped with the tools to reach new customers in altogether new ways. To compete, organizations seek not simply new products and services but innovative new value propositions, revenue formulas, and pricing strategies that resonate with the needs and expectations of today's consumers.

More than ever, Chicago is in the spotlight as a nationally recognized innovation hub. Triggered by the success of Chicago-based Groupon as well as a proliferation of startups in the Chicagoland area, venture capital investment is flowing into the state at record levels and is expected by year's end to surpass 2010's $1.45 billion. Like Groupon, many of these startups are Web-based companies devoted to wielding new paths to success within today's virtual marketplace.

The nominee pool for the 2011 Chicago Innovation Awards, an event recognizing the year's most innovative Chicago area businesses, non-profits, and governmental organizations, includes an unprecedented number of Chicago-area visionaries who are transforming their industries' core value formulas and rules of customer engagement. Here's a look at a few of this year's standout nominees and what they have to teach us about staying competitive through fundamental business model innovation, including strategies to:

1. Leverage social networks
2. Consider new payers
3. Capitalize on online efficiencies; and
4. Connect customers for strategic advantage

Chicago Innovation Award Nominee: Leo Burnett's Facebook ad unit, Comment

Challenge: How do companies manage brand image in a world where social networks powerfully impact consumer discourse?

Solution: For the first time in its history, Facebook in 2010 invited outside ad agencies to submit ideas for a new Facebook ad unit. Agencies were asked to design an experience that would engage Facebook users with known brands in new and innovative ways. Facebook selected Chicago-based Leo Burnett's concept Comment for further development. Comment works by creating a Facebook ad each time a brand updates its page. Facebook users may then comment on that ad. The ad then pops up on the user's newsfeed and becomes visible to their Friend network. Comment has been found to create 50 times greater brand exposure than that obtained through a brand's actual fan base.

Lesson: Utilize social networks as a new platform for value creation. They are an organic way to reach consumers through their most trusted sources - their peers.

Chicago Innovation Award Nominee: Meridix Sports Network

Challenge: How do media companies assign value in a world that's gone digital - where online content has overturned traditional revenue models and airwaves are open to anyone with an interest and an internet connection?

Solution: Combating the popular mindset that news should be free, Naperville-based Meridix Creative has adopted a licensing fee-based funding model that charges broadcasters, not viewers, for content. Meridix Creative provides a platform for broadcasters, schools, and sports teams to Webcast local high school or college sporting events through live audio and video streaming. The system enjoys both national and international users and has experienced 242,480,579 total hits from 607,279 unique visitors in the last year alone.

Lesson: When assigning monetary value to an intangible end product, such as digital content, keep in mind that the optimal payer may not be the end user. Consider all members of the value chain and gather deep insight into the ways they use and interact with your product, paying particular attention to where they perceive value and why. Then, target the correct customer with pricing and packaging options tailored to their needs.

Chicago Innovation Award Nominee: EVED LLC

Challenge: How do traditionally brick and mortar businesses compete with online retail?

Solution: Skokie-based EVED Marketplace is the first and only global online meeting and event marketplace designed to streamline transactions between all members of the event supply chain. EVED leveraged a suite of online technologies to effectively eliminate the need for office space, reducing inefficiencies and improving client acquisition costs and quality expectations. Through EVED, customers are able to browse through a supplier's online Gallery Store, receive quotes embedded with photographs and video links, and comment, approve, and pay online.

Lesson: Online portals have bypassed the brick and mortar capital once needed to do business. There is great opportunity for brick and mortar companies and the B2Bs who serve them to transform the speed and efficiency at which they operate through online technology and digital information.

Chicago Innovation Award Nominee: GiveForward

Challenge: How does an organization capture the attention of its target segment amidst the dizzying array of options made accessible through online networks?

Solution: Chicago-based GiveForward leveraged crowdsourcing technology to intimately connect interested parties with charitable causes. Prior to GiveForward, only established non-profits could raise money online, allowing small-scale donors little control or visibility as to where their dollars went. GiveForward upended this traditional model by developing an easy way for anyone to donate to a given cause at any time. GiveFoward provides a user-friendly, online system in which users may set up fundraisers, receive contributions online, and spread their word to family and friends via social media and email. To date, GiveForward has raised millions of dollars toward a variety of causes, including chemotherapy, organ transplants, funeral expenses, and mission trips.

Lesson: Open-source channels enable organizations to match an unprecedented level of outside interest and expertise with a finer array of user needs. Utilize crowdsourcing techniques to drive toward deeper, more personalized, or increasingly sophisticated connections between your offering and your target audiences.

Together, these nominees demonstrate that success lie in approaching the modern marketplace as an area budding with opportunity. By treating the full spectrum of emerging trends and technologies - like social networking, digital content, online portals, and crowdsourcing - as vehicles for growth and innovation, rather than technical impasses, these businesses and others will keep Chicago shining in the innovation spotlight.